Principles in Assessing

Compensatory
Damages
 Compensation
• Compensation means the award of a sum of money which, so far as
money can be is equivalent to the claimant’s loss or suffering.
 Damages
• Damages are an award of money made to compensate a claimant who has
suffered loss or damage as a result of a wrong for which the defendant is
responsible.

• The object of an award of damages is to give the claimant compensation

for the loss, the damage, the injury he has suffered’ (McGregor on
Damages)
 Damages
• Damages is the monetary compensation awarded for invasion of the
plaintiff’s common law rights or failure to perform obligations owed to
him at common law by the defendant.

• The award of damages is the sum assessed by the court and is required to
be paid by the defendant to the plaintiff (unliquidated damages).
 Compensatory Damages
• Compensatory damage is money awarded to a claimant to compensate for
damage, injury, or other loss incurred. Compensatory damage is awarded
in a civil court case where there has been a loss as a result of another
party's negligence or unlawful conduct.
• The claimant must show that a loss occurred and that it was due to the
defendant, in order to receive compensatory damages. The claimant must
also have the ability to quantify the amount of loss in front of the jury or
judge's eyes.
 Pecuniary vs Non-Pecuniary Losses
• The loss suffered may be pecuniary or non-pecuniary.
• Pecuniary simply means of or relating to money, so these damages are
those where the monetary value is easily discernable.
• Pecuniary losses or damages (that is loss of wealth) where the equivalent
to the claimant’s loss can be precise.
• Those damages that we can quantify in financial terms.
 Pecuniary vs Non-Pecuniary Losses
Examples of pecuniary damages include:
• Medical Costs, which may include ambulance bills, hospital bills, doctors’ bills
medication expenses, etc.
• Lost Wages, which usually include income that’s lost because the claimant can’t work
as a result of the incident in question
• Future Care Costs, which may be a concern if an injury results in long-term care needs
• Physical Damage, which may include damage to any property owned by the claimant
 Pecuniary vs Non-Pecuniary Losses
• Non-pecuniary where the sum to be awarded as compensation cannot be
precisely equivalent to the loss and where the only way to ensure
consistency of awards is through conventionally accepted tariffs of value.
• Non-pecuniary losses, or non-economic damages, are those damages
that are not economic in nature, yet still affect a person’s lifestyle and
enjoyment of life.
 Pecuniary vs Non-Pecuniary Losses
For example:
Pain and Suffering, which may be awarded if the claimant experiences serious pain and/or suffering because of the
incident
Emotional Distress, which may be awarded if the claimant experiences depression, anxiety or other emotional
harm because of the incident
Impairment of Life, which may be awarded if the claimant experiences a long-term reduction in their quality of life
because of the incident
Impairment of Relationships, which may be awarded if the claimant’s relationships with family, friends, colleagues or
others deteriorate because of the incident
Impairment of Mental Abilities, which may be awarded if the claimant’s mental capabilities are reduced by the incident
Impairment of Physical Abilities, which may be awarded if the claimant’s physical capabilities are reduced by the
incident
Loss of Future Wages, which may be awarded if the claimant’s ability to work in the future is diminished by the
incident
 Pecuniary vs Non-Pecuniary Losses
• Wright v. British Railway Board [1983] 2 AC 773: In this case the plaintiff
brought an action against the defendants for damages in respect of personal
injuries sustained by him in the course of his employment with them, and the
trial judge awarded him general damages for pain and suffering and loss of
amenities of £15,000. He held that he was bound by the decision of the Court of
Appeal in Birkett v. Hayes [1982] 1 W.L.R. 816 to award 2 per cent. interest on
that sum for the period from service of the writ to date of judgment.
• On appeal by the plaintiff direct to the House of Lords contending that the rate of
interest awarded was too low:-
 Pecuniary vs Non-Pecuniary Losses
• Held, dismissing the appeal, that the interest to be awarded on damages for non-
economic loss, like the assessment of compensation for that loss, could only be a
conventional figure for which the Court of Appeal was generally the best qualified to lay
down guidelines; that the House of Lords should hesitate long before departing from
those guidelines and, since judges were required to assess damages for non-economic
loss in the money of the day at the date of trial, 2 per cent from the date of service of the
writ to the date of judgment represented an appropriate rate of interest; that although the
rate of 2 per cent. had been recommended at a time when the rate of inflation was high
and the anxiety of investors to preserve the real value of their money made them willing
to accept a much lower "real" rate of interest as a reward for foregoing the use of their
money, that guideline, which like other guidelines served the purpose of promoting
predictability and thus facilitating settlements, should not be varied until the long term
trend of future inflation became predictable and expert evidence showed that 2 per cent
was no longer the appropriate rate of interest.
 Pecuniary vs Non-Pecuniary Losses
• Non-pecuniary losses are compared by examining the extent of the
interference with and the importance of the personal asset affected. As such,
all non-pecuniary loss is concerned with the claimant’s distress or loss of
happiness. Similar awards should be made for similar non-pecuniary losses
and more serious losses should be compensated by higher awards.
• The courts have ruled that the level of award for pain and suffering and loss
of amenities should be fair and reasonable, should keep pace with the times
and should in no sense reflect the claimant’s wealth.
 Pecuniary vs Non-Pecuniary Losses
• Scott v. Musial [1959] 2 QB 429: In this case it was held that the difference in
the approach of an appellate court to an award of damages by a judge sitting
alone and an award by the verdict of a jury is such that the court will not interfere
merely because it is shown that an award by a jury does not conform to such
pattern or level of awards as may have emerged from the decisions of judges in
comparable cases. The jury by established practice is given no guidance as to the
amount which they should award, nor should they know of any such pattern.
Their views may form a valuable corrective to the views of judges; and the
appellate court will not interfere with their award unless it is satisfied that it is
out of all proportion to the circumstances of the case.
 Pecuniary vs Non-Pecuniary Losses
Brenda was putting her son Jacob to bed when the tree from the neighbor's yard
crashed down on the house and shattered the window in Jacob's bedroom. The
neighbor had just cut the tree down without professional help, not expecting it to
fall on Brenda's house. A piece of glass from the window sliced Jacob's arm. Jacob
had to get stitches, stay the night in the hospital, and take medicine for a resulting
infection. His medical bills totaled $6,300, and his doctor said that Jacob would
need to have plastic surgery once the wound was fully healed to avoid a disfiguring
scar. Jacob and Brenda have had trouble sleeping since the accident, and Jacob
refuses to sleep in his own room. Brenda also lost wages due to doctor visits.
 Compensatory Aims for Breach of Contract

• The aim in contract is to put the claimant into as good a position as it

would have been in if the contract had been performed.

• If one party makes default in performing his side of the Contract, then the
basic loss to the other party is the market value of the benefit of which he
has been deprived through the breach. Put shortly, the claimant is entitled
to compensation for the loss of his bargain’ McGregor On Damages
 Compensatory Aims for Breach of Contract

• Robinson v. Harman [1848] 1 Exch 850: In this case it was held that the
rule of common law is that where a party sustains a loss by reason of a
breach of contract he is, so far as money can do it, to be placed in the
same situation with respect to damages as if the contract had been
performed.
 Compensatory Aims for Breach of Tort
• Tort is a civil wrong. It is a breach of duty fixed by law, and its breach
redressable primarily by an action for damages.

• The aim of compensatory damages is to put the claimant into as good a

position as it would have been if no tort had been committed.
 Compensatory Aims for Breach of Tort
• In the case of Livingstone v. Rawyards Coal Co (1880) 5 AC 25 (HL),
Lord Blackburn opined that the measure of damages was that sum of
money which will put the party who has been injured or who has suffered,
in the same position as he would have been in if he had not sustained the
wrong for which he is now getting his compensation or reparation.
 Assessing Damages
In order to assess whether an innocent party may be entitled to damages, there are six things
that should be considered:

•Has the claimant suffered any loss?

•Is the loss suffered actionable?
•Did the breach cause the loss?
•Was the type of loss reasonably foreseeable?
•Did the claimant mitigate the loss?
•Did the claimant contribute to the loss?
 Factual Causation
• Causation is the idea that the defendant must have caused the loss complained of.
This is causation in fact.
• The claimant must establish that “but for” the tort or breach of contract he would
not have suffered the loss.
• Factors that may require consideration are whether there has been, or are:
• Multiple causes of damages;
• Intervening acts contributing to or exacerbating the damage; and
• Losses which are properly defined as a loss of chance.
 Factual Causation
• Barnett v. Chelsea and Kensington Hospital Management Committee
(1969) 1 QB 428: In this case the claimant’s husband died because of the
failure of the doctor to examine the deceased who died of arsenic
poisoning. The doctor was found to be in breach of his duty of care but the
claimant’s action failed because she could not establish on a balance of
probabilities that the doctor’s negligence had been a cause of the death
since, even if the deceased had been properly examined and treated, he
would almost certainly still have died.
 Factual Causation
Cork v Kirby MacLean Ltd [1952] 2 All ER 402: The claimant was painting the inside roof
of a factory. The claimant was working on a narrow platform 23 feet above the ground, with
no guard-rails or toe-boards. The claimant had epilepsy, and was aware of this fact; his
employers were not. Whilst working, the claimant had an epileptic fit and was killed when
he fell from his platform. When the case came to court, the defendants argued that the cause
of death was the claimant’s epilepsy, which it could not be held responsible for. Conversely,
the claimant’s estate argued that the cause was a lack of appropriate guard-rails on the
platform. In formulating the but for test, Lord Denning said the following: "if the damage
would not have happened but for a particular fault, then that fault is the cause of the
damage; if it would have happened just the same, fault or no fault, the fault is not the cause
of the damage."- Lord Denning, at 407.
And thus, because guardrails would have likely prevented the fall, it was ruled that there
was a causal link between the lack of guardrails and the injury to the claimant.
 Factual Causation
• Successive Sufficient Events
Where a tort or breach of contract was sufficient in its own right to bring about
the loss and yet there was an additional sufficient event, application of the
but for test to each event would produce the result that neither was the cause
of the loss. As a result, the courts have departed from simply applying the
but for test and have relied on other reasoning to decide that each event , or
one or other, was a cause of the loss. This therefore represents a minor
qualification to the compensatory aim being to put the claimant into as good
a position as of the tort or breach of contract had not been committed.
 Factual Causation
• Successive sufficient events may be either concurrent or successive.
A concurrent cause is one of multiple causes that contributed to the damages at-issue. For
example, where two independent fires negligently started by D1 and D2 respectively,
converge on a house and demolish it, each being sufficient on its own to demolish it.
Applying the but for test neither defendant’s breach of duty would be regarded as a cause
because each could say that the claimant’s home would have been burnt down even if he
had not committed is breach of duty. It has been established that the but for test is not
applied in situations of concurrent sufficient events and that D1 and D2 can both be liable
for the loss.
See Cook v. Lewis, 1951 CanLII 26 (SCC), [1951] SCR 830; Summers v. Tice (Nov. 17, 1948),
Charles Summers v. Harold Tice - 33 Cal. 2d 80, 199 P.2d 1; Fitzgerald v Lane [1989] 1
AC 328
 Factual Causation
• Successive causes: An individual’s injuries are caused by multiple
improper acts occurring at different times.
• The test for successive causes is as follows:
• If the successive event was tortious, the original tortfeasor is liable for the losses he
caused as if the successive event never happened;
• If the successive event was natural, than the original tortfeasor will only be liable for
the losses up to that event;
 Factual Causation
• Baker v. Willoughby [1970] AC 467: As a result of D1’s negligence the claimant suffered
an injury to his left leg. Later he was the victim of an armed robbery during which he
was shot in the left leg by D2. the leg had to be amputated. D1 argued that he was liable
only for loss suffered from having an injured leg until the date of the robbery; after that
time D1’s breach could not be regarded as a factual cause of that loss. But the House of
Lords rejected that argument and held that as regards an action against D1 in a situation
of successive sufficient causes the but for test should not be applied; D1 should therefore
be liable for the loss suffered from having an injured leg without any reduction on the
ground of D2’s breach.
• See also Performance Cars Ltd v Abraham (1962) 1 QB 33; Rahman v Arearose (2001)
QB 351
 Factual Causation
• Where the successive sufficient event comprises a natural event followed
by the defendant’s breach of duty, the but for test will be applied to the
breach of duty so that the defendant will not be liable. This follows from
the notion of taking one’s victim as one finds him and is consistent with
Baker. Similarly in Kerry v. England [1898] Ac 742 where a druggist
supplies tartar emetic (fatal poison) instead of bismuth, for an attack of flu
to a fatally sick patient, damages were reduced to nil on the basis that the
tartar emetic had not accelerated to any appreciable extent an imminent
death.
 Factual Causation
• Material Increase of Risk: The but for test has been departed from where
the defendant has broken its duty to the claimant and as such has
materially increased the risk of the type of injury or disease that the
claimant has in fact suffered, not least because of the present state of
scientific knowledge the claimant cannot prove but nor can the defendant
disprove that it was the breach of duty that caused the injury or disease.
 Factual Causation
• Fairchild v. Glenhaven [2003] 1 AC 32: In this case it was held where an employee
had been exposed by different defendants, during different periods of employment,
to inhalation of asbestos dust in breach of each defendant's duty to protect him from
the risk of contracting mesothelioma and where that risk had eventuated but, in
current medical knowledge, the onset of the disease could not be attributed to any
particular or cumulative wrongful exposure, a modified approach to proof of
causation was justified; that in such a case proof that each defendant's wrongdoing
had materially increased the risk of contracting the disease was sufficient to satisfy
the causal requirements for his liability; and that, accordingly, applying that
approach and in the circumstances of each case, the claimants could prove, on a
balance of probabilities, the necessary causal connection to establish the defendants'
liability.
 Factual Causation
• Cook v. Lewis [1951] SCR 830 where two defendants had fired a shot and
hit the plaintiff, who although could not identify who had fired the
connecting bullet, both were held liable.
• McGhee v. National Coal Board [1973] 1 WLR 1 where as a result of the
defendant’s failure to provide the plaintiff had contracted dermatitis and
was successful in obtaining damages for the defendants’ negligence.
 Proof of Loss and Loss of a Chance
• Where the proof of loss is as regards past facts the civil standard of proof
is on a balance of probabilities. However where one is dealing with future
events full damages is only awarded if the claimant can prove its loss with
reasonable certainty. Where the chance of the loss is entirely speculative
no damages are recoverable.
 Proof of Loss and Loss of a Chance
• In Mallet v. McMonagle [1970] AC 166 Lord Diplock noted that in
assessing damages which depend upon on what will happen in the future
or would have happened in the future if something had not happened in
the past the court must make an estimate as to what are the chances that a
particular thing will or would have happened and reflect those chances,
whether they are more or less than even, in the amount of damages which
it awards.
 Proof of Loss and Loss of a Chance
• In Chaplin v. Hicks [1911] 2 KB 786 where as a result of the defendant’s
breach of contract the plaintiff was not given adequate notice of an
interview for a beauty competition and the 12 winners were chosen in her
absence. The Court of Appeal held that while the claimant could not
recover for the loss of a theatrical engagement, since she could not
establish to the required degree of proof that she would have been one of
the 12, nevertheless she should be given contractual damages for the loss
of the chance of being one of the 12.
 Proof of Loss and Loss of a Chance
• Similarly in Hotson v. Berkshire Area HA [1987] AC 750 where the claimant
brought an action for negligence claiming that if his injury had been properly
diagnosed at the start, his permanent disability would have been avoided. The
judge found that even if the defendant had treated the claimant properly there was
still a 75% chance that his disability would have developed. Nevertheless he
awarded the claimant damages for being deprived by the defendant’s negligence of
the 25% chance of avoiding the disability. The House of Lords later overturned the
award and concluded that the claim failed in that the claimant had not established
that the negligence of the defendant had caused his hip disability. See also Gregg v.
Scott [2002] EWCA Civ 1471 (see House of Lords judgment post 2004).
 Proof of Loss and Loss of a Chance
• Scale of Assessment proportionate to the chances
Where damages are to be assessed according to the chances, the scale runs
from reasonable certainty down to more than a mere speculative
possibility. Case on point Ratcliffe v. Evans [1892] 2 QB 524.
Coming down the scale if loss cannot be proved with reasonable certainty,
damages are awarded in proportion to the chance of loss. Leading cases
are Chaplin v. Hicks and Allied Maples Group Limited v. Simmons and
Simmons [1995] 1 WLR 1602.
 Proof of Loss and Loss of a Chance
• Difficulty of Assessment is not a bar
Where loss has been proved or is presumed the court will do its best to
assess damages even if the assessment is difficult and is necessarily
imprecise. Case on point The Mediana [1900] AC 113.
 Theoretical Underpinning of
Compensation
• Breach of contract
See The Reliance Interest in Damages (1936 -37) 46 Yale LJ 52. This
article sets out as some of the theoretical underpinnings as follows:
Protecting the claimant’s expectation interest. This is regarded as an odd
kind of compensation since it often puts the claimant into a better position
than if no contract had been made. The authors Fuller and Perdue proffer
an argument on the grounds of the expectation interest of compensatory
damages and state that damages could be restricted to protecting the
claimant’s reliance interest instead of expectation interest.
 Theoretical Underpinning of
Compensation
• Torts
There have been no arguments on what the compensatory aim should be and
the agreement is that the compensatory aim is and should be to put the
claimant into as good a position as if no tort had been committed.
 Protection of the Reliance Interest Where
Direct Protection of the Expectation Interest is
barred
• Bain v. Fothergill (1874) LR 7 HL 158; although this case has been abolished by the
Law of Property (Miscellaneous Provisions) Act 1989, the rule established therein
has been somewhat followed. This rule establishes that where a vendor for a sale
agreement broke the contract through no fault of his and has failed to complete, the
purchaser could not recover damages for the difference between the market value of
the land and the contract price. Rather he was restricted to damages in respect of at
least some expenses incurred in relation to the contract and those damages could be
viewed as at least partially protecting the claimant’s reliance interest. See also
McRae v. Commonwealth Disposals Commission (1950) 84 CLR 377.
 The Justification for Reliance Damages
for breach of Contract
This supports a view to protect the claimant’s expectation interest and allow
the claimant the benefit of a presumption that he has not made a bad bargain.
See Commonwealth of Australia v. Amann Aviation Ltd (1991) 66 ALJR
123.
 Recovery of Pre-contractual Expenses
• Pre-contractual expenses have been held recoverable in cases such as
Lloyd v. Stanbury [1971] 1 WLR 535. See also Anglia Television Limited
v. Reed [1972] 1 QB 60.